Before putting your home up for sale, you’ll want to give careful consideration to current market conditions.
Understanding the market in which you’re selling will help you make important decisions about your reasons and strategy, timing, asking price, net financial requirements and alternatives – whether you ultimately sell, or not.
You’ll first need to know whether it’s a buyer’s market or a seller’s market whether there are more homes on the market than potential buyers (buyer’s market), or vice-versa (seller’s market).
- You’ll want to think about seasonality and the best times of the year to sell.
- You’ll consider mortgage rate trends – are rates high or low? rising? falling? or relatively steady?
- You’ll need to investigate the average asking and selling prices of similar homes in your neighborhood, how long they have generally taken to sell, and whether the homes currently for sale in your area are few or many.
- Finally, you’ll want to appraise the overall economic situation. When the economy flourishes, the demand for housing is high. During times of uncertainty, it diminishes.
The Buyer’s Market
Simply stated, a buyer’s market is one in which the number of homes on the market is greater than the number of potential purchasers. In a buyer’s market, purchasers have greater choice which inevitably leads to greater competition among sellers.
Price, location, size, neighborhood, type of structure, additional features, the uniqueness of your home and its level of upkeep are just some of the points that prospective buyers will compare before making an offer.
Economic factors over which you have no control might also affect local housing markets. At a national level, high or increasing mortgage rates often lead to reduced demand and a buyer’s market.
Regionally, economic downswings or declining employment opportunities might also contribute to a surplus of homes for sale in a specific area.
The Seller’s Market
A seller’s market is one in which most sellers would like to find themselves one in which demand exceeds supply and a large number of potential buyers vie for a limited number of homes.
Like the buyer’s market, a seller’s market is often driven largely by external economic forces – low or declining mortgage rates that make even higher-priced properties more attractive, or economic upswings that bring people flooding into a city or region to capitalize on local employment opportunities.
In a true seller’s market, you’re in the driver’s seat. You can likely ask top dollar for your home (or close to it!) and still attract at least a few interested prospects.
The hotter the market, the more critical timing becomes for buyers. Homes can be sold virtually overnight, with timid buyers often losing out to more aggressive ones.